Will US dollar lose its role as the global reserve currency before 2050 - Essay Example

There is a tendency among governments and individuals to diversify by storing the value of their wealth in other dominant currencies, other than the dollar or converting them into commodities. The BRICs development bank, weakening dollar trend, increased US budget deficit, emergence of alternative contender currencies, and shifting pricing away from the dollar elaborates on the serious threat the US dollar faces, in its position as the global reserve currency. The US Dollar has served as the dominant and world reserve currency for about seventy years today, since the adoption of the system back in the 1940s.

Over the years, it gained acceptance and increased use in international transactions and by governments’ central banks for purposes of storing value, exchanges and invoicing transactions. It brought numerous advantages to the governments across the world, and especially the US citizens, whose purchases of goods or services have been at much cheaper rates compared to foreign nations. Some countries went on to peg their currencies to the dollar, but they have experienced the risks besides the benefits of the act.

Though still a global reserve currency, the US dollar has been faced by numerous challenges towards the end of the 20th century and the past one decade. Inclusive to this are the exposed weakening US dollar, depreciated dollar and risk of volatility, emergence of challenging currencies to the dollar, changing monetary institution and dollar pricing, and diversification against the dollar. Though a debatable issue, the US Dollar is more likely to lose its role as the global reserve currency by 2050.

It appears that countries are slowly changing their currencies in trading of products even at the international level. Where dollars have been used, other currencies are taking control. For example, most wise and even rich people have studied the behavior of the